As the Philippine economy nears its transition to upper-middle-income country status by 2025, the Philippine Stock Exchange (PSEi) is increasingly bullish. The positive outlook is fueled by continued monetary easing, specifically potential interest rate cuts by the Bangko Sentral ng Pilipinas (BSP).
Lower borrowing costs for businesses and consumers, resulting from rate cuts, could spur economic activity and enhance market liquidity. Analysts anticipate the full impact of the recent rate cut to be felt by 2025 to 2026.
PSE president and chief executive Ramon Monzon attributed tepid trading in the first half of 2024 to persistent high interest rates and geopolitical concerns. He expressed optimism for more active trading in the remaining months of the year, citing expectations of a rate cut and strong first-half earnings from banks and other listed firms.
Historically, such macroeconomic adjustments have led to increased investment and consumer spending, creating a more favorable environment for stock market growth. Lower capital costs are likely to stimulate domestic and foreign investments, potentially driving up the 30-company PSEi as companies expand and new ventures are launched.
In addition to supportive monetary policy, the Philippines’ economic trajectory toward UMIC is expected to attract more investor interest. This transition could enhance investor confidence and create a more robust economic backdrop for the stock market.
The strong lineup of potential initial public offerings (IPOs) for 2025 is also expected to invigorate the market. Among the notable IPOs on the horizon is the potential listing of GCash, a leading digital financial services provider. The GCash IPO, projected for next year, is expected to be a significant event for the market.
Given GCash’s prominent position in the digital payments sector and its widespread adoption, its entry into the stock market is likely to attract considerable investor interest. This could not only bring new capital to the market but also highlight the Philippines’ growing tech and financial sectors.
Prime Infrastructure of business tycoon Enrique Razon and SM Prime Holdings Inc.’s real estate investment trust (REIT) are also expected to conduct their IPOs next year when market conditions are expected to be better.
The combination of favorable rate cuts, economic growth prospects and a vibrant IPO landscape suggests a promising period ahead for the PSEi.
If these trends continue to align, the Philippine stock market could see enhanced investor activity and significant gains, making it an increasingly attractive destination for both local and international investors.
